It’s a bold new future for Ontario milk drinkers: after a year of bureaucratic wrangling, 3-litre milk containers are now legal and cleared for sale on grocery shelves.

A tribunal hearing scheduled for next week was cancelled after the regulators who oversee Ontario’s Milk Act decided to throw caution to the wind and just open up the market to the new size.

“We finally stepped back from it and, no different from you, said this is way too complicated,” said Geri Kamenz, the chair of the Ontario Farm Products Marketing Commission. “We’ll just put it out there and say, ‘Here it is, it’s an option, do with it what you want.’”

The rule change officially went through on Nov. 19. Now, when you thumb through a copy of the Milk Act’s Regulation 753, you’ll see a new entry in the Size of Containers category: “A container that is three litres.”

The quarrel started in the fall of 2013, when two dairy industry groups received a letter from the marketing commission. It notified them that Mac’s Convenience Stores wanted to try a “new fluid milk test market initiative,” which simply meant selling milk in 3-litre containers.

This set off a cascade of letters, appeals, jurisdiction fights, court orders to produce documents, and squabbles over redacted files.

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The Dairy Farmers of Ontario — who represent the farmers who milk cows — supported a limited test market, so long as it carefully tracked the effect on overall milk sales.

But the Ontario Dairy Council — who represent the factories that process and package the milk — were adamantly opposed to a limited test market, arguing it would give certain processors and retailers an unfair head start in the 3-litre market. Instead, the council favoured a scenario with no restrictions on container type or retailer.

The marketing commission decided to allow the test market.

The ODC immediately appealed to the quasi-judicial Agriculture, Food and Rural Affairs Appeal Tribunal. The marketing commission then challenged the tribunal’s jurisdiction.

Everything bogged down until, finally, the commission decided to just unilaterally change the regulations and open up the market entirely to 3-litre containers.

“They could have done this last year at this time and it would have been perfectly fine,” said Christina Lewis, the ODC president. “We could have saved a lot of time and money, but at the end of the day we’re quite happy that the decision they made was fair for everybody.”

This raises the question: if the marketing commission always had the power to change the regulations, and was perfectly happy to include the 3-litre size, why did the change take so long to happen?

When this query was put to the ODC by the media in the summer, they answered that dairy farmers were opposed to opening up the market. The Dairy Farmers of Ontario vigorously protest this.

“We always supported anything that would grow the market and be in the best interests of consumers, farmers, processors,” said Graham Lloyd, general counsel for the DFO.

He maintains the media has unfairly portrayed the farmers as obstructionist on the 3-litre milk file.

“The request to us was, would you support a test market, and our answer was we did,” Lloyd said. “We’re happy to see if a different container size would be in the best interest.”

However, the hundreds of pages of documents filed with the tribunal in preparation for next week’s now-cancelled hearing lend support to the claim of dairy farmer reticence.

A letter from Peter Gould, DFO president, told the marketing commission the DFO Board’s support for the test market was conditional on it tracking sales and sharing the results industry-wide.

“The Board is concerned that, longer term, there could be a downsizing from four-litre packages to three-litre packages,” said a letter dated Dec. 3, 2013. “This is of particular concern with respect to four-litre bags of milk.”

Gould’s letter said that “DFO support for a test market should not be interpreted as support for a permanent change to the regulations.”

The back-and-forth of Ontario’s milk war was all falling on the marketing commission chair, Kamenz. He pointed out his position is actually part-time, and he still has a farm in Kemptville with cattle and hogs.

“I’m not a bureaucrat,” he said. “We didn’t want to see consumption drop further, but ultimately at the end of the day, it’s not about consumption anymore. It’s about giving the consumer what the consumer wants.”

In fact, a few months ago, the marketing commission put forward a proposal to just repeal all of the container size regulations.

“We looked at it, I think, no differently than you and other people looking at the issue from the outside,” Kamenz said. “We stepped back from it and said, wait a minute here … You have this entire regulatory structure making it impossible for the retailer to respond to a consumer-driven demand.”

Industry groups were skeptical of deregulation, however, and the commission decided to play it safe and just add the new size in.

Kamenz said he knows the process seems opaque, but he preaches patience.

“I come to this, and sometimes get frustrated by what is a very large regulatory beast. The reality is, you can’t turn it on a dime.”

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